Some employees in the United States and other markets will be suspended without pay. This move may affect thousands of the company’s more than 25,000 employees.
Editor’s note: This article is from Tencent Technology , reviewed by Jiaohan Han.
In April 16th, according to foreign media reports, Indian startup Oyo is planning to transfer some employees from the company’s payroll to the largest investor Softbank’s employee list. This sign indicates that SoftBank is helping Oyo, one of the most important portfolio companies, at a critical juncture.
With the promotion of SoftBank and its 100 billion dollar vision fund, Oyo has become one of the largest hotel chains in the world. Oyo persuaded independent hotels to join its network and use the company’s developed booking technology, and draw commissions from hotel revenue, so that the business continued to grow. Although Oyo is still at a loss, as its business expands, its valuation rapidly expands, which in turn increases the book income of the Vision Fund.
But last year, after startups funded by soft banks such as WeWork, a shared office space start-up, other Vision Fund portfolio companies focused on profits, and Oyo stopped its rapid growth. In January this year, Oyo announced the layoffs of thousands.
The outbreak immediately hit the global hotel industry. The company ’s CEO Ritesh Agarwal posted a video on the company ’s official blog last week. He said in the video that Oyo ’s revenue has now been reduced by about half, “The company ’s balance sheet Under tremendous pressure. ”
Agarwal said that Oyo will leave some employees in the US and other markets without pay. This move may affect thousands of the company’s more than 25,000 employees.
Oyo is not the only company in trouble. Marriott International and other hotel chains are also leaving tens of thousands of employees on leave without pay.
Oyo ’s risk to the Vision Fund is also very high: Softbank said this week that the valuation of the portfolio company in the Vision Fund has fallen significantly, resulting in the company ’s investment loss in the previous fiscal year estimated at $ 17 billion. This amount may erase all of the fund ’s income and keep its asset value below cost.
SoftBank TableIt shows that after spending billions of dollars to rescue WeWork last year, it will no longer rescue any companies it invested in.
The Vision Fund owns nearly half of the shares of Oyo, which is much more than the shares held by the general fund. For a long time, Softbank CEO Masayoshi Son has considered this company particularly promising. Last year, Sun Zhengyi personally provided a loan guarantee for Agawal to purchase $ 2 billion worth of Oyo stock.
Oyo plans to relocate to SoftBank ’s employees mainly from Oyo ’s branch in Japan. Local strict labor laws mean that the company cannot lay off employees earlier this year. According to an employee notice, Oyo is working on a plan to transfer some employees to SoftBank’s company.
Notice that this initiative is one of Oyo ’s attempts to reduce staff costs by half. Since the outbreak of the new coronavirus, the company has about 600 employees in Japan, and its revenue has dropped significantly. Oyo started business in Japan last year, hoping to become an important market for the company, but it has been difficult to achieve the ambitious hotel membership goals.
SoftBank ’s long-term strategy is to invest huge amounts of cash in promising young companies to create big winners, but this strategy has suffered a dramatic failure on WeWork and has also drawn attention to other investments in the fund.
Oyo ’s Japanese subsidiary is a joint venture between Oyo, Japan Telecom ’s subsidiary of SoftBank and Vision Fund. A person familiar with the matter said it made it more natural for SoftBank to provide help.
Softbank declined to comment.